The venture capital market has faced significant decline in recent years, according to the latest Venture Pulse report from KPMG Private Enterprise. In the first quarter of 2024, global venture capital investment was only $75.9 billion, the lowest in nearly five years.
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America holds the lead in venture capital investment
In the first quarter of 2024, venture capital investment in America significantly outpaced other regions of the world, concentrating the lion's share of global capital investment.
The total amount of investments in North and South America amounted to $38.2 billion, distributed over 3,205 transactions, with the main share coming from the United States ($36.6 billion over 2,882 transactions).
Anthropic companies received the largest investments ($4 billion), Ascend Elements ($704 million), Figure AI ($675 million), Areteia Therapeutic ($425 million) and Mirador Therapeutics ($400 million).
Amid global competition, Asia remained in second place with $18.9 billion with 2,305 agreements, while Europe grew to $17.9 billion thanks to several large-scale investments in high-tech projects.
Largest in Europe was an agreement worth $5.2 billion with the Swedish company H2 Green Steel.
Sectoral highlights: “clean” technologies and artificial intelligence (AI)
Exceptions to the general trend of investment decline were in the clean sectors technologies (Cleantech) and artificial intelligence (AI), which have attracted significant investments. Seven of the ten largest deals in the quarter were in these two industries.
Artificial intelligence remains a key driver of venture capital investment globally.
Major deals stood out in the first quarter of 2024, such as a $4 billion investment in the US company Anthropic and significant investments in YueZhiAnMian (China), Figure AI, Lambda (both – USA), MiniMax AI (China) and Mistral AI (France). Generative AI continues to attract investment focused on large language models and the integration of AI into business processes to improve productivity.
Microsoft is actively developing this area, including a partnership with Mistral AI and the involvement of the co-founder of Inflection.
In the first quarter of 2024, the world saw the emergence of ten new unicorn startups, valued at more than a billion US dollars, each of them based on artificial intelligence technologies.
Most of these companies are located in the US, including Celestial AI, Together AI, Perplexity, Io.net, Figna AI and ElevenLabs. Also, China (YueZhiAnMian and Miotec), France (Mistral) and India (Kruti) have their own unicorns in the field of artificial intelligence.
Increasing investment in defense and security technologies
Interest in technology defense and security continues to grow, driven by increasing global geopolitical tensions. Industries such as drone technology, satellite and software solutions are becoming especially relevant.
Prospects for the second quarter of 2024
In the second quarter of 2024, the global IPO market promises to be a key arena to watch. Successful IPOs early in the quarter may cause venture capital funds to feel pressure from investors to step up funding. Smaller M&A activity may increase in different regions of the world.
This is because companies that are unable to raise additional financing are becoming potential candidates for complex M&A. Other firms may be interested in acquiring these companies to obtain their intellectual property or employ their employees.
Artificial intelligence will continue to attract global venture capital investment, focusing on specific industry solutions for financial, legal and real estate companies.
Cleantech will also remain an important investment area, highlighted by growing regulatory requirements and an increase in the number of regions implementing ESG initiatives.
